Study open up swaths of additional copper for Austral to mine

High copper prices are a boon to junior producer Austral with an optimisation study confirming that an additional 94,000t could be produced from its previously mined pits over the next two to five years.

The study by independent consultant ERM Australia Consultants applies a $12,500 per tonne copper price to the Lady Annie, Lady Brenda, Mount Clarke, and Flying Horse pits, and brings to the fore just how beneficial high copper prices are to the company.

Copper is currently trading well above US$8,800/t ($13,115/t) and while this is down from the peak above US$9,300 in 2021, it remains elevated due to increasing demand for electrification as the world marches towards net zero in 2050.

Indeed McKinsey & Company has forecast that annual copper demand will increase to 36.6 million tonnes by 2031 while expected supply projects of about 30.1Mt will leave a supply gap of about 6.5Mt, which is likely to be music to Austral Resources’ (ASX:AR1) ears.

This is especially true given that the optimisation study has also identified an additional lens adjacent to the Lady Colleen deposit that could offer a further 36,000t of contained copper production to its operations in Queensland’s Mt Isa region.

Notably, the company now has the opportunity to fast-track development of these pits combining them with existing production at Anthill to mine an additional 20,000t to 25,000t of contained oxide copper – a 110% increase on its forecast 2024 to 2025 oxide production.

The addition of cut-back oxide tonnes from Lady Colleen to Anthill output will also increase annual production to over 35,000t to 40,000t of copper over the next 3-5 years, which will be transformational for Austral.

All optimised pits are on existing mining leases and are based on existing JORC compliant Resource estimates, providing a rapid pathway to production and a compelling risk/return exploration opportunity.

Pathway to becoming a mid-sized copper producer

“We are delighted with the outcomes of the optimisation study demonstrating the strength of Austral Resources’ copper production long-term growth story,” managing director Dan Jauncey said.

“This has also underpinned Austral’s business plan for a sustainable future, delivering a great outcome for our shareholders and helping with ESG goals.

“The optimisation work supports a viable go-forward case, and is a very exciting development for Austral, our partners and shareholders.

“The optimisation work confirms we have a business that can continue to be significant and has the scale to potentially be a mid-size copper producer with economic relevance, especially as we continue to move into a greener world.”

Austral produced 2,818t of copper in the March 2023 quarter from its Anthill operation, which generated net revenue of $35.55m and operating cash flow of $13.6m.

With this output from Anthill funding and facilitating the complete refurbishment of the crushing and SX/EW infrastructure, the optimisation study’s potential to substantially increase resources and production will be transformational for the company.

Next steps

The company plans to carry out geological drilling to upgrade the remaining Inferred resources, which make up about 10% of the resources covered by the optimisation study, to the higher confidence Indicated category.

Geotechnical drilling and further investigation will also be conducted to reflect more appropriate overall slope angles per area/region instead of the general slope angle used in all deposits.

Other work includes hydrogeological/hydrological work to estimate the water inflows and their effect on the pit walls and cutbacks, further scheduling to optimise the best sequencing of the cutbacks and mine plan, and updating the Lady Colleen Scoping Study based on the additional identified resources.

This article was developed in collaboration with Austral Resources, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.